top of page

How to choose the best debt repayment strategy?

Writer: Isa KettmannIsa Kettmann

Essentially, there are two methods which you could use to tackle debt, they are the Snowball and Avalanche methods respectively.



Snowball Method: Using this method, you pay the smallest debt balances first. The way this method works is that you make the minimum monthly payments on all the debts. You also end up making an extra payment towards the smallest debt. After completely paying off the smallest debt, you start making payments to the next smallest debt. The payments of these debts continues till you are left debt-free.


The only pro of this method is that you stay motivated as you pay the debts quickly. The major con of following this method of debt repayment is that you end up paying more interest in the long-term. This method works best for someone who feels happy and motivated to see results quickly.


Avalanche Method: According to this method, you are required to pay the highest interest balances first. You should make minimum monthly payments on all the debts. You must make extra payments towards the highest interest loans. After completely paying off this debt, you must make payments for the next highest interest rate debt. Essentially, you continue to make debt payments till you go debt-free.


The pro of this method is that you end up saving on interest in the long-term. The con of this method is that it can be demotivating as it takes you longer to repay your debts. This method specifically works for people who like to meet long-term goals and do not care much about immediate results.


Comments


  • YouTube
  • LinkedIn
  • White Twitter Icon
  • White Facebook Icon

© 2025 Dunhill Financial

Authorized and Regulated in the United States by the SEC as Dunhill Financial, LLC.

Dunhill Financial Ltd is an Appointed Representative of Blacktower Financial Management Limited and a member of the Nexus Global (IFA Network) which is a trading name of Blacktower Financial Management Limited who are authorised and regulated in the UK by the Financial Conduct Authority, reference number 188611. Dunhill Financial Ltd FCA reference number is 933933. Dunhill
Financial Ltd is registered in England and Wales, No: 12218688. Registered Address: Swan Court, 11 Worple Road, Unit 109, SW19 4JS, London, UK.

The financial advisers trading under Dunhill Financial/BFMI are members of Nexus Global (IFA network). Nexus Global is a division of Blacktower Financial Management (International) Limited (BFMI). All approved members of Nexus Global are appointed Representatives of BFMI. BFMI is licensed and regulated by the Gibraltar Financial Services Commission (FSC) and bound by the rules under licence number 3647.

bottom of page